Inflation rate, food prices rise

India's annual rate of inflation rose to minus 0.12 per cent for the week ended Aug 29 from minus 0.21 per cent the week before, according to official data released on Thursday.

The official wholesale price index (WPI) released by the commerce and industry ministry showed food prices jumping an annual 14.8 per cent by August-end.

"This is due to the long and dry spell of drought, which has hit crop production across the country," said Sri Ram Khanna, a professor at the Delhi School of Economics.

Finance Minister Pranab Mukherjee had said on Monday that the drought in India -- declared in 252 out of 626 districts -- would not only impact agriculture output but also pressure the availability of water in the ensuing seasons.

According to him, 81 water reservoirs are monitored centrally and, up to Aug 20, these were filled only to the extent of 36 per cent of the prevailing level last year -- when again, they were only filled two-thirds.

"This will have an impact on availability of water for the winter crop. Also, it may affect some of the hydel power projects."

The price indices for primary articles and manufacturing products rose for the week ended Aug 29, while that of the fuel, power, light and lubricants remained unchanged.

The index for primary articles rose 0.3 per cent to 271.2 (provisional) from 270.4 (provisional) the week before, while the index for manufactured products rose 0.2 per cent to 207.9 (provisional) from 207.5 (provisional).

The price index for fuel and power remained unchanged to the previous week level at 343.3 (provisional).

The rate turned negative for the week ended June 6 for the first time since the new wholesale price index (WPI) series started in 1995.

The inflation rate had last turned negative in 1977. Negative inflation implies that the average wholesale price level was lower during a given week, than it was in the corresponding week a year ago. It does not necessarily reflect retail prices.